Rivian’s Earnings Missed Forecasts. Why the News Was Better Than Feared.

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Electric-vehicle maker Rivian went public in November.

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Courtesy Rivian

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Electric-truck start-up Rivian Automotive missed first-quarter estimates. Shares are up, anyway, because the report was better than feared and cash operating expenses declined from the fourth quarter.

Wednesday evening, Rivian (ticker: RIVN) reported a loss of $1.77 per share, and an operating loss of $1.6 billion on sales of $95 million. Wall Street was looking for a loss of $1.45 per share, and an operating loss of $1.5 billion on sales of about $131 million.

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It’s a miss, but guidance was unchanged. The company still expects to deliver about 25,000 vehicles in 2022. What’s more, Rivian produced 2,553 electric trucks in the quarter and delivered 1, 227, up from only 909 deliveries in the fourth quarter.

Operating expenses, net of stock-based compensation which can fluctuate from quarter to quarter, came in at roughly $760 million. Rivian spent about $840 million in the fourth quarter on a comparable basis.

The company ended the quarter with about 90,000 reservations, and almost $17 billion in cash. It went through, very roughly, $1 billion less cash than forecast.

On the company’s conference call, after the release of results, management was careful to point out that all the spending to date has provided 150,000 units of annual capacity and that future spending can be adjusted depending on what the market demands. CEO RJ Scaringe added that the company can launch the company’s second platform, called the R2, with the cash on hand by 2025.

Rivian didn’t change its outlook for spending, either. Capital spending is still projected to be roughly $2.6 billion in 2022. Operating expenses are projected to come in at about $4.8 billion.

Rivian shares were up more than 7% in after-hours trading. Shares fell 9.6% to close at $20.60 in regular trading. The S&P 500 and Dow Jones Industrial Average dropped 1.7% and 1%, respectively.

Coming into the earnings report, investors were desperate for good news because shares have been pummeled in recent weeks. Coming into Wednesday trading, shares were down about 78% year to date, and off about 87% from an all-time high of almost $180.

It’s been a perfect storm for the start-up. It’s been hit by the broader selloff in richly valued high-growth stocks. The Nasdaq Composite is down about 27% year to date.

Rivian stock has also been hit by company-specific issues. The company’s 2022 production outlook disappointed investors back in March and the end of the initial-public-offering lockup on insiders selling shares has been a recent overhang for the price.

The IPO lockup expired on May 9. Shares declined about 26% in the month leading up to the expiration. The Nasdaq dropped 11% over the same span. The S&P 500 dropped 8%.

Options markets show that investors should expect significant volatility after earnings. Rivian stock was expected to move roughly 20%, up or down, following the report. Shares dropped 8% to 10% after the company’s past two quarterly reports.

Rivian’s IPO was Nov. 9. The first quarter of 2022 is the company’s third quarterly report as a publicly traded company.

Write to Al Root at [email protected]


Credit: www.marketwatch.com /

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